Sivaram said the June quarter may remain soft, but the outlook beyond that is improving. “Quarter one may not be that great, but quarter two onwards things could look better,” he said, adding that lower crude oil prices are a positive for India after the impact of global conflicts. He also said consumption remains resilient, while earnings outside the largest companies continue to hold up.
The market veteran expects the next phase of returns to be driven by sectors beyond the top 50 stocks. “If you have the ability, you will find winners,” he said, pointing to the resilience of mid-cap earnings and valuations.
Sivaram maintained a cautious view on the information technology sector, arguing that earnings growth remains weak despite recent corrections in stock prices. He said the industry’s long-term earnings growth has historically been modest and does not justify premium valuations.
“I’m still negative. I don’t see growth,” he said, adding that the sector is undergoing a valuation reset and could continue to face pressure if earnings remain subdued.
He also remains underweight on banks, citing intense competition in retail lending. According to Sivaram, private lenders have lost market share in home and auto loans as public sector banks offer more competitive lending rates.
“My view is, stay underweight on banks,” he said. Instead, he prefers non-banking financial companies (NBFCs
), housing finance companies (HFCs) and wealth management firms, where he believes growth prospects remain stronger.
Sivaram continues to favour manufacturing, power equipment and pharmaceuticals. He said demand for power equipment remains strong globally despite concerns over increased competition from Chinese suppliers.
He also sees significant long-term opportunities in pharmaceutical exports, particularly in GLP-1 drugs and contract development and manufacturing (CDMO). “The entire value chain will do well,” he said, noting that patent expiries across multiple countries could benefit Indian companies.
Sivaram expects returns to moderate on gold after last year’s rally but remains constructive over the medium term. He expects gold to deliver double-digit annual returns over the next five years, supported by central bank buying and continued global liquidity.
While he remains cautious on real estate due to rising supply in several cities, he said the sector could recover if equity markets strengthen in the second half of the year.
Sivaram also backed international diversification as part of long-term asset allocation, recommending investors maintain exposure to overseas equities alongside domestic investments and gold through systematic investing.
He said the long-term outlook on defence remains positive due to higher global defence spending, but advised investors to be selective as valuations have risen sharply and stock-specific analysis is critical.
For the full interview, watch the accompanying video
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